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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (25395)	9/9/1999 7:26:00 PM
From: pater tenebrarum	Respond to of 99985

Les, the whole KEA thing is mysterious...perhaps it was just a bout of short covering due to it's being oversold?

To: Les H who wrote (25395)	9/9/1999 8:25:00 PM
From: Les H	Read Replies (1) \| Respond to of 99985

Weak Dow Transports, Utilities Suggest Suspect Market By Ralph J. Acampora financialweb.com September 8, 1999 The three Dow averages are not telling the same story these days. The Dow Jones Industrial Average (DJII) made an important inflection low in June of this year and then scored another all-time high as recently as August 25. On the other hand, the Dow Jones Transportation Average (DJIT) and the Dow Jones Utility Average (DJIU) made lower lows in August and then failed to follow the industrials into new high ground during the market's most recent rally phase. Why does this matter? For one thing, Dow theoreticians are concerned about the disparate trends between the industrials and the transports -- they call it "negative non-confirmation." This is a clear signal to them that the market remains within the confines of a secondary correction phase and that these major indexes must both consolidate and then make respective new closing highs before renewing the DJII's primary bull market signal. The Dow Jones utilities, on the other hand, also made its recent low in mid-August and then turned up sharply. Although it did not form a new high as the industrials did, the former index did penetrate its downtrend, unlike the transports. In all three cases, the recent rally faltered and rolled over. This near-term downside reaction is neither unusual nor should it be unexpected, however, because the transportation and utility averages, given their failure to match the industrials, suggest that the rest of the market is also suspect. The question remains whether they can all consolidate normally above their recent lows or not. This is an extremely important question because any penetration below these respective lows would reinstate major downtrends and thus further downside potentials. For the past two months, I have stated that I am willing to give the Dow Jones industrials the benefit of the doubt that it will hold above its June low of 10,334.42 and then eventually move to the 12,000-plus area by the end of this year. This observation is based upon the diverse nature of its 30 components and that these stocks are actually benefiting from the rotation taking place within the market these days. But my optimism for the Dow transports and utilities is not as strong. I am concerned that they will break their respective August lows. Such a move would imply further deterioration in market breadth, exemplified by the New York Stock Exchange's advance/decline line. If the scenario outlined above comes to pass, it will appear very similar to the split market that investors had to endure in 1994. It was a time when interest rates increased, breadth decreased and the Dow Jones industrials remained within a tight 10 percent trading range all year.